The Dow and S&P 500 declined by 0.87% and 0.94% to close at 255,169.53 and 2,706.05 respectively of Thursday. This came due following news that Donald Trump and China’s Xi will not meet before March. In March new tariffs onChinwhyese goods will take effect which is expected to continue to hurt the world’s economic growth in the short and medium run. Shares of Caterpillar and Deere fell in excess of 1% following the news as these companies are significantly affected by global trade.
The US and China news also affected European markets with the DAX closing 2.4% lower. The Euro Stoxx 600 closed lower by 1.75% while the Italian MIB closed 1.8% down. European markets are now bearish with the Stoxx 600 closing 17% off its 52-week high and the DAX closing 22% off its 52-week high. Vinci airports announced that it will buy a majority stake in London Gatwick. Investors seemed to react positively to the news sending the stock up by 1%.
It was a largely positive day on the Malta Stock Exchange as the MSE Equity price index was up by 0.32%. The day’s gains came mostly from MIA which surged by 2.4% to reach new highs. HSBC bank Malta plc and PG plc also made gains of 0.6% and 3.1% respectively. Plaza Centers plc and International Hotel Investments plc retracted by 2.9% and 1.6% respectively. Go plc decreased by 0.5% following the announcement of the allocation policy for the IPO of BMIT Technologies plc. The shares of the new company where oversubscribed by 2.5 times the shares made available. Refunds for the over-subscriptions will be made by 14th February.
Cannabis stocks on the decline
Cannabis stocks were mixed on Thursday following a report released by the Canadian governments showing that the full national legalization of cannabis last October has not seen the expected increase in users.
Only around 15% of Canadians ages 15 years or older have reported using cannabis in the past three months with 19% saying that they expect to use it in the next three months. To add to this the U.S. has increased its pressure on the use of CBD, a substance found in cannabis that is widely used in drinks and foods. This comes following claims that it alleviates the chances of anxiety and depression. The regulation for this substance has been moved from Drug Enforcement Administration to the Food and Drug Administration leaving companies in the blind with regards to how regulation and enforcement of this will work.
The hype behind the cannabis market has been mainly coming from the legalization and deregulation of the substance which was expected to lead to increases in use however this does not seem to be panning out as expected. On the back of the news the cannabis stocks have lost value with the Marijuana index losing close to 9 % in the past week.
Kellogg’s sell-off
Kellogg reported its earnings for the fourth quarter 2018 last Thursday before the bell. Earnings came in above analyst estimates however the stock was still down by over 5%. The earnings came in at 91c per share which is a decline from earnings reported in the same quarter last year of 93c per share. The report also included operating oncome of $326 million for the fourth quarter versus $389 million in the same quarter last year. Revenue decreased from Q4 2017 by $130 million to $3.19 billion.
The Kellogg selloff comes on the back of the 2019 outlook the company gave. It expects declines of earnings per share of between 5% and 7%. Kellogg seems to have reached a mature stage and is not expecting to see growth in the future primarily due to lack of increase in U.S. population as well as other developed countries.
This article was issued by Aaron Saliba, Junior Traderat Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.